It is not uncommon to see companies perform well in the years after insiders buy shares. The flip side of that is that there are more than a few examples of insiders dumping stock prior to a period of weak performance. So shareholders might well want to know whether insiders have been buying or selling shares in Enbridge Inc. (TSE:ENB).
Do Insider Transactions Matter?
It’s quite normal to see company insiders, such as board members, trading in company stock, from time to time. However, such insiders must disclose their trading activities, and not trade on inside information.
Insider transactions are not the most important thing when it comes to long-term investing. But logic dictates you should pay some attention to whether insiders are buying or selling shares. For example, a Columbia University study found that ‘insiders are more likely to engage in open market purchases of their own company’s stock when the firm is about to reveal new agreements with customers and suppliers’.
Check out our latest analysis for Enbridge
The Last 12 Months Of Insider Transactions At Enbridge
The Executive VP and President of Gas Transmission & Midstream, William Yardley, made the biggest insider sale in the last 12 months. That single transaction was for CA$737k worth of shares at a price of CA$49.49 each. That means that even when the share price was slightly below the current price of CA$49.65, an insider wanted to cash in some shares. When an insider sells below the current price, it suggests that they considered that lower price to be fair. That makes us wonder what they think of the (higher) recent valuation. Please do note, however, that sellers may have a variety of reasons for selling, so we don’t know for sure what they think of the stock price. We note that the biggest single sale was only 11.9% of William Yardley’s holding.
Over the last year, we can see that insiders have bought 17521 shares worth CA$843k. On the other hand they divested 21414 shares, for CA$1.1m. All up, insiders sold more shares in Enbridge than they bought, over the last year. You can see the insider transactions (by individuals) over the last year depicted in the chart below. If you click on the chart, you can see all the individual transactions, including the share price, individual, and the date!
If you like to buy stocks that insiders are buying, rather than selling, then you might just love this free list of companies. (Hint: insiders have been buying them).
Insiders at Enbridge Have Sold Stock Recently
There was substantially more insider selling, than buying, of Enbridge shares over the last three months. We note insiders cashed in CA$1.1m worth of shares. On the flip side, insiders spent CA$496k on purchasing shares. Since the selling really does outweigh the buying, we’d say that these transactions may suggest that some insiders feel the shares are not cheap.
Insider Ownership of Enbridge
I like to look at how many shares insiders own in a company, to help inform my view of how aligned they are with insiders. A high insider ownership often makes company leadership more mindful of shareholder interests. Enbridge insiders own 0.2% of the company, currently worth about CA$225m based on the recent share price. I like to see this level of insider ownership, because it increases the chances that management are thinking about the best interests of shareholders.
What Might The Insider Transactions At Enbridge Tell Us?
The insider sales have outweighed the insider buying, at Enbridge, in the last three months. Despite some insider buying, the longer term picture doesn’t make us feel much more positive. While insiders do own a lot of shares in the company (which is good), our analysis of their transactions doesn’t make us feel confident about the company. Of course, the future is what matters most. So if you are interested in Enbridge, you should check out this free report on analyst forecasts for the company.
But note: Enbridge may not be the best stock to buy. So take a peek at this free list of interesting companies with high ROE and low debt.
We aim to bring you long-term focused research analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned. Thank you for reading.